A common misconception is that spouses have full access to each other’s finances, but this is not the case. Retirement accounts, pensions, and other assets in one’s individual name cannot be accessed by a spouse unless that spouse has been authorized to do so under a valid Power of Attorney. Medicaid recipients with retirement accounts are required to put those accounts in “payout status.” Allowing an agent to change the distribution frequency or dollar amount is crucial to achieving and maintaining eligibility for services.
You will also require an agent under a Power of Attorney to protect monthly income in certain circumstances. Community Medicaid recipients need to deposit income above the Medicaid allowable limit to a pooled income trust. Without a Power of Attorney, your spouse does not have the authority to create one of these accounts on your behalf, nor is your spouse able to transfer your monthly income into the trust. Maintaining the pooled income trust is a key part of the plan as it allows the Medicaid applicant to use those funds to pay their household expenses.
Beyond the protection of income, it is often advisable to sign a Statutory Gifts Rider alongside the Power of Attorney document. Signing this rider is optional, but if it is done correctly, your agent may be allowed to engage in certain Medicaid asset protection planning. For example, the Rider can allow your agent to create trusts and transfer assets to those trusts for protection. It can also allow your agent to transfer assets to themselves if you specifically assign that right. Take for example a spouse that maintained one checking account in her sole name, separate from her spouse. In order to be eligible for Medicaid services, the accounts must total less than $15,750. If that account needs to be transferred to her spouse and the Medicaid applicant cannot make this transfer on her own, the spouse will need the specific authority through the Power of Attorney and Statutory Gifts Rider to do so.
Not all powers of attorney are created equal. If you have not yet done so, consult with an Elder Law attorney to review and advise you as to the effectiveness of your documents should a Medicaid application or planning be necessary in the future.
– Britt Burner, Esq. and Nancy Burner, Esq.